World Bank’s IFC Eyes Mideast Trade and Renewable Investments

As political unrest continues to grip the Middle East, it is hardly a surprise that many international investors are wary about the region’s business prospects. Whether that is warranted or not, the International Finance Corporation, a World Bank Group subsidiary that promotes the private sector in developing markets, is trying to change that perception by stepping up its investments in the financial and power sectors.

“We have a strong appetite to do more in the region after the Arab Spring,” said Dimitris Tsitsiragos, vice-president at the IFC. “There are many things to do to help restore confidence as the whole transition process has taken longer than expected and is still ongoing,” he said.

Dimitris Tsitsiragos says the IFC has a strong appetite for more investments in the region.

One of the IFC’s priorities centers on investing in financial companies to spur intra-regional trade, Mr. Tsitsiragos said. In the past years, for example, the IFC invested in Bahrain’s Ahli United Bank, Oman’s Bank Muscat and Lebanon’s Bank Audi. In supporting these banks with either equity or loans, the IFC also hopes to create regional champions.

Another key area for future investments is renewable energy. The IFC earlier this week completed a $100 million investment in a Saudi Arabia-based power and water company. Since 2011, the IFC has invested almost $1 billion in the energy sector in the Middle East and Africa, $283 million of which went into wind and solar renewable energy projects.

A key area for future IFC investments is renewable energy, says Mr. Tsitsiragos.

The ACWA Power deal in Saudi fits into IFC’s broader strategy of tapping the Middle East’s vast energy resources but at the same time promoting renewable energy use in a region that is lagging the rest of the world on that front, says Mr. Tsitsiragos. He called on the region’s governments to do more about energy efficiency.

“You need a commitment from governments and from the region on energy efficiency – that is going to be the revolution to me. The oil producers can show the way in this respect. It’s something that the governments need to be more pro-active about, more at the front of it, you need initiatives to promote energy efficiency.”

The IFC currently has a portfolio worth around $5 billion in the wider Middle East, $1 billion of which is in Egypt, says Mr. Tsitsiragos.

“Conceivably we can double this portfolio in Egypt if the investments are there. That’s not out of the realm of possibilities. If we find investments, we will support them.”